Boeing's 737 and 787 Dreamliner Models Boosted Q3 Deliveries
Boeing (BA) recently released its third quarter aircraft delivery numbers for its commercial and defense operations. The company has been working to increase its commercial airplane production capacity, which was reflected in its quarterly deliveries that rose 7% over last year.
The aerospace industry is witnessing a boom in passenger traffic, which has led to the higher demand for commercial aircraft. Orders have piled up over the past few years and now stand at record levels for both Boeing and its European counterpart, Airbus (EADSY).
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The delivery stats
Boeing dispatched 199 jets during the third quarter, compared with 186 airplanes in the year-ago period. The company delivered 126 737s, its top-selling aircraft model. The 787 Dreamliner accounted for the second highest deliveries with 37 units, followed by 27 777s. Apart from this, the aero major dispatched five 767s and four 747s during the period.
In the defense division, the company registered the delivery of eight F/A-18 jets in the third quarter, which brings the total to 28 units so far this year. Boeing also delivered three F-15s, four P-8s and two C-17A Globemaster III aircraft during the period.
Delivery analysis over the past few quarters
Boeing generates its revenue and earnings primarily from the commercial airplane division. The chart below shows the American aerospace behemoth's deliveries for the commercial division from 2013. The 737 happens to be the bread and butter aircraft program, accounting for the most deliveries. Boeing has delivered 1,951 commercial airplanes since the first quarter of 2013. Of these, 1,300 units were its narrow body, 737 aircraft. This explains why the aircraft program is so essential to the company. It is the plane maker's regular source of revenue and brings in steady cash flow.
Data taken from Boeing website.
The 787 Dreamliner delivery count from the first quarter of 2013 stands at 280 units. The model has yet to break-even, and has been eroding the company's cash flows and hurting margins. Boeing continues to sell each Dreamliner at a price below what it costs to produce. However, the plane is expected to attain cash flow break-even next year. Once that happens, the company's top and bottom lines will get a good boost.
Increasing production efforts
Increasing air traffic is pushing the demand for airplanes. Both Boeing and Airbus are augmenting their production capacity to manage the demand and record-level commercial backlog. Boeing is planning the production ramp up of two of its key airplane programs, the 737 and the 787 Dreamliner. The 737 production rate was increased to 42 units a month in 2014 and its deliveries have increased ever since. The company also plans to increase the production rate to 47 a month in 2017 and eventually reach at 52 per month in 2018.
As far as the Dreamliner's production rate is concerned, Boeing has finally managed to attain stable deliveries by overcoming production challenges. The plane maker is slated to increase the Dreamliner's production rate to 12 unit a month in 2016 from its current 10 per month.
So far this year, Boeing has delivered 580 compared to 528 units in the year-ago period. This represents a gain of nearly 10%. The highest delivery improvements have been noted in the 737 and 787 models. This is a clear reflection of Boeing's impetus to advance the production rates of these aircraft programs.
This article first appeared on GuruFocus.
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